Employment Agreement - Pharmos Corp. and Gad Riesenfeld
EMPLOYMENT AGREEMENT
Employment Agreement dated as of April 2, 2001, between PHARMOS
CORPORATION, a Nevada corporation (with its successors and assigns, referred to
as the "Corporation"), and GAD RIESENFELD (hereinafter referred to as
"RIESENFELD").
PRELIMINARY STATEMENT
The Corporation desires to employ RIESENFELD as President and Chief
Operating Officer of the Corporation, and RIESENFELD wishes to be employed by
the Corporation, upon the terms and subject to the conditions set forth in this
Agreement. The Corporation and RIESENFELD also wish to enter into the other
agreements set forth in this Agreement, all of which are related to RIESENFELD's
employment under this Agreement.
AGREEMENT
RIESENFELD and the Corporation therefore agree as follows:
1. Term of Employment. The Corporation hereby employs RIESENFELD and
RIESENFELD hereby accepts employment with the Corporation for the period (the
"Initial Term") commencing on the date hereof (the "Commencement Date"), and
ending on the first anniversary of the date hereof or upon the earlier
termination of the Initial Term pursuant to Section 6. The Initial Term will be
extended automatically for additional one year periods (each, an "Additional
Term"; together with the Initial Term, the "Term"), subject to the rights of the
parties generally to terminate this Agreement in accordance with the provisions
of Section 6(a). The termination of the Term for any reason shall end
RIESENFELD's employment under this Agreement, but, except as otherwise set forth
herein, shall not terminate RIESENFELD's or the Corporation's other agreements
in this Agreement.
2. Position and Duties. During the Term, RIESENFELD shall serve as
President and Chief Operating Officer of the Corporation, which title shall be
adjusted as necessary to maintain its seniority in the event of subsequent
changes in the Corporation's title structure. RIESENFELD shall also hold such
additional positions and titles as the CEO of the Corporation may determine from
time to time. RIESENFELD shall report to the CEO. During the Term, RIESENFELD
shall devote his full time and attention to performing his duties as an employee
of the Corporation.
3. Compensation.
(a) Base Salary. The Corporation shall pay RIESENFELD a base salary,
beginning on the first day of the Initial Term and ending on the last day of the
Initial Term, of not
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less than $194,250 per annum, payable semi-monthly on the Corporation's regular
pay cycle for professional employees.
(b) Other and Additional Compensation.
(i) Section 3(a) establishes the minimum compensation during
the Term and shall not preclude the Board of Directors
(the "Board") from awarding RIESENFELD a higher salary
or any bonuses or stock options in the event of a
successful financing or otherwise, and in any event, in
the discretion of the Board. It is the practice of the
Corporation to adjust compensation on January 1st of
each year.
(ii) During the Term, RIESENFELD shall receive an annual cash
bonus based upon the attainment of agreed upon goals and
milestones as determined by the Chief Executive Officer
of the Corporation and approved by the Compensation and
Stock Option Committee of the Board.
4. Employee Benefits.
(a) General. During the Term, RIESENFELD shall be entitled to the
employee benefits, including 3 weeks vacation, a 401(k) plan, and current health
and dental insurance benefits made available by the Corporation and other
benefits described in this Section 4.
(b) Additional Benefit. The Corporation hereby agrees to provide
RIESENFELD with a certain benefit relating to the Corporation's investment of
amounts equal to certain insurance premiums in lieu of its acquiring a "split
dollar" life insurance policy on his life (the "Benefit") more specifically
described in a separate agreement between RIESENFELD and the Corporation (the
"Benefit Document"). The Benefit shall be payable to RIESENFELD or his estate,
as applicable, upon his retirement at the age of at least 62 or death or upon
RIESENFELD's termination for "Disability"(as defined in Section 7).
(c) Managers Insurance. The Corporation shall pay directly or
indirectly the premium on RIESENFELD's present "Managers Insurance Scheme" at
salary levels of no less than 100% of his then current base salary. Payment is
to be made every 4 months or 6 months as required by the insurer. The
Corporation's contribution will be 8.33% for severance payment, 5% for pension
and 2.5% for disability. The amount contributed by the Corporation shall be
deducted from premiums payable by the Corporation pursuant to any pension plans
available to RIESENFELD pursuant to the Corporation's benefit plans for senior
management.
(d) Relocation Plan. The Corporation shall pay a reasonable rental
for a suitable residence for RIESENFELD in proximity to any facility of the
Company (outside of Israel) at which RIESENFELD performs his primary duties as
President and Chief Operating Officer of the Company. The Corporation shall pay
reasonable moving expenses of RIESENFELD and his family on their return to
Israel. Any taxes due on these payments shall be borne by the
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Corporation.
(e) Corporation Automobile. RIESENFELD shall have the use of a
Corporation automobile. The Corporation shall reimburse RIESENFELD for gasoline
expenses and all reasonable expenses related to the use and maintenance of such
automobile on presentation of appropriate documentation.
(f) Sick Leave. RIESENFELD shall be entitled to a paid sick leave of
up to eighteen (18) days during each twelve (12) month period of his employment
hereunder, provided that any unused sick leave in respect of any year may be
carried forward only up to an aggregate of ninety (90) days.
(g) Telephone Expenses. RIESENFELD shall be reimbursed for all home
telephone expenses incurred on a separate telephone line in furtherance of the
business of the Corporation provided that such line be used only for business
purposes and RIESENFELD submits appropriate documentation for the expenses.
5. Expenses. During the Term, the Corporation shall reimburse RIESENFELD
for actual out-of-pocket expenses incurred by him in the performance of his
services for the Corporation upon the receipt of appropriate documentation of
such expenses.
6. Termination.
(a) General. The Term shall end immediately upon RIESENFELD's death,
and for Cause or Disability, as defined in Section 7. Upon termination of the
Term due to RIESENFELD's death, all compensation due RIESENFELD under this
Agreement will cease, except as set forth in Section 9. Upon the Corporation's
termination of the Term for Cause, RIESENFELD shall have ten (10) days to cure
said Cause, if curable. With respect to the termination of RIESENFELD pursuant
to Section 6(e), the Corporation may elect to terminate this Agreement at any
time by giving 180 days' prior written notice, during the Initial Term, and by
giving 90 days' prior written notice during the each Additional Term. With
respect to termination by RIESENFELD other than pursuant to Section 6(f),
RIESENFELD may elect to terminate this Agreement at any time by giving 60 days'
prior written notice at any time during the Term, and, upon such termination,
all compensation due RIESENFELD under this Agreement will cease, except as set
forth in Section 9.
(b) Notice of Termination. The Corporation shall notify RIESENFELD
in writing of its termination of his employment hereunder. The Corporation's
failure to give notice under this Section 6(b) shall not, however, affect the
validity of the Corporation's termination of the Term.
(c) Termination by the Corporation for Cause. If terminated by the
Corporation for Cause, the Corporation shall describe to RIESENFELD the grounds
for his termination. Upon the Corporation's termination of the Term for Cause,
all compensation due RIESENFELD under
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this Agreement will cease, except as set forth in Section 9. Moreover, all
options and warrants to purchase Common Stock of the Corporation shall expire
upon such termination.
(d) Termination by the Corporation upon a Change of Control. In the
event that the Corporation terminates its relationship with RIESENFELD within
one (1) year of a "Change of Control", as defined in Section 7, RIESENFELD shall
receive the following:
(i) an amount equal to eighteen (18) months of base salary
for the then current year (in addition to the base
salary paid to RIESENFELD after the Corporation's
delivery of notice of termination pursuant to Section
6(a) and the actual date of termination);
(ii) Other Compensation (as defined in Section 9); and
(iii) the full vesting of RIESENFELD's stock options and
warrants, and extended exercisability thereof until
their respective expiration dates.
RIESENFELD shall be entitled to the foregoing benefits once notice of
termination is given by the Corporation, regardless of his subsequent Death,
Disability or termination for Cause.
(e) Termination by the Corporation other than upon Change of
Control, Death, Disability or Cause. In the event that the Corporation
terminates its relationship with RIESENFELD, including a termination by the
Corporation effective upon the expiration of the Initial Term or an Additional
Term but other than upon a Change of Control, Death, Disability or Cause,
RIESENFELD shall receive the following:
(i) an amount equal to twelve (12) months of base salary for
the then current year (in addition to the base salary
paid to RIESENFELD after the Corporation's delivery of
notice of termination pursuant to Section 6(a) and the
actual date of termination);
(ii) Other Compensation; and
(iii) the full vesting of RIESENFELD's stock options and
warrants, and extended exercisability thereof until
their respective expiration dates.
(f) Termination by RIESENFELD upon Good Reason or Change of Control.
In the event RIESENFELD terminates his relationship with the Corporation for
"Good Reason" as defined in Section 7, within one (1) year of the occurrence of
the event which established the "Good Reason", or within one (1) year of a
Change of Control, RIESENFELD shall receive the following:
(i) an amount equal to twelve (12) months of base salary for
the then current year (in addition to the base salary
paid to RIESENFELD after his delivery of notice of
termination pursuant to Section 6(a) and the actual date
of termination);
(ii) Other Compensation; and
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(iii) the full vesting of RIESENFELD's stock options and
warrants, and extended exercisability thereof until
their respective expiration dates.
RIESENFELD shall provide prior written notice to the Corporation of his
termination pursuant to this Section 6(f), and such notice shall describe the
particular "Good Reason(s)" at issue.
7. Definitions.
(a) "Cause" Defined. "Cause" means (i) willful malfeasance or
willful misconduct by RIESENFELD in connection with his employment; (ii)
RIESENFELD's gross negligence in performing any of his duties under this
Agreement; (iii) RIESENFELD's conviction of, or entry of a plea of guilty to, or
entry of a plea of nolo contendere with respect to, any felony; (iv)
RIESENFELD's habitual drunkenness or excessive absenteeism not related to
illness; (iv) RIESENFELD's material breach of any written policy applicable to
all employees adopted by the Corporation; or (vi) material breach by RIESENFELD
of any of his agreements in this Agreement.
(b) "Disability" Defined. "Disability" shall mean RIESENFELD's
incapacity due to physical or mental illness that results in his being unable to
substantially perform his duties hereunder for six consecutive months (or for
six months out of any nine-month period). During a period of Disability,
RIESENFELD shall continue to receive his base salary hereunder, provided that if
the Corporation provides RIESENFELD with disability insurance coverage, payments
of RIESENFELD's base salary shall be reduced by the amount of any disability
insurance payments received by RIESENFELD due to such coverage. Upon
termination, after the end of the period of Disability, all compensation due
RIESENFELD under this Agreement shall cease, except as set forth in Section 9.
(c) "Change of Control" Defined. "Change of Control" shall mean the
occurrence of any one or more of the following events:
(i) An acquisition (whether directly from the Corporation or
otherwise) of any voting securities of the Corporation (the "Voting
Securities") by any "Person" (as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities and Exchange Act of 1934, as
amended (the "1934 Act")), immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated under
the 1934 Act) of fifty percent (50 %) or more of the combined voting power
of the Corporation's then outstanding Voting Securities.
(ii) The individuals who, as of the date hereof, are members
of the Board (the "Incumbent Board"), cease for any reason to constitute
at least fifty-one percent (51%) of the Board;; or
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(iii) Approval by the Board or stockholders of the Corporation
of, or execution by the Corporation of any agreement with respect to, or
the consummation of:
(A) A merger, consolidation or reorganization involving
the Corporation, where either or both of the events described in
Section 7(c)(i) or 7(c)(ii) would be the result;
(B) A liquidation or dissolution of or appointment of a
receiver, rehabilitator, conservator or similar person for, the
Corporation; or
(C) An agreement for the sale or other disposition of
all or substantially all of the assets of the Corporation to any
Person (other than a transfer to a subsidiary of the Corporation).
Notwithstanding anything contained in this Agreement to the contrary, if
RIESENFELD's employment is terminated prior to a Change in Control and
RIESENFELD reasonably demonstrates that such termination (i) was at the request
of a third party who has indicated an intention or taken steps reasonably
calculated to effect a Change in Control and who effectuates a Change in Control
(a "Third Party") or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes of this Agreement, the date of a Change in Control with respect to
RIESENFELD shall mean the date immediately prior to the date of such termination
of RIESENFELD's employment.
(d) "Good Reason" Defined. "Good Reason" shall mean the occurrence,
whether or not after a Change in Control, of any of the events or conditions
described below:
(i) a change in RIESENFELD's status, title, position or
responsibilities (including reporting responsibilities) which represents
an adverse change from his status, title, position or responsibilities as
in effect immediately prior to such change; the assignment to RIESENFELD
of any duties or responsibilities which are inconsistent with his status,
title, position or responsibilities as in effect immediately prior to such
change; or any removal of RIESENFELD from or failure to reappoint or
reelect him to any of such offices or positions;
(ii) any failure to award RIESENFELD bonus payments and/or
increases in base salary in a manner consistent with the practice of the
Corporation prior to such failure;
(iii) the Corporation's requiring RIESENFELD to be based at
any place outside the United States, except for reasonably required travel
on the Corporation's business which is not materially greater than such
travel requirements prior to such time;
(iv) the failure by the Corporation to (a) continue in effect
(without reduction in benefit level, and/or reward opportunities) any
material compensation or
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employee benefit plan in which RIESENFELD was participating at any time
prior to such failure, or (b) provide RIESENFELD with compensation and
benefits, in the aggregate, at least equal (in terms of benefit levels
and/or reward opportunities) to those provided for under each other
employee benefit plan, program and practice in which RIESENFELD was
participating at any time prior to such failure; or
(v) any material breach by the Corporation of any provision of
this Agreement which is not cured within ten (10) days after the receipt
of written notice by the Corporation of a description of the breach.
8. Payment Terms. Payment of any amounts to which RIESENFELD shall be
entitled pursuant to the provisions of Sections 6 and 7 shall be made no later
than sixty (60) days following receipt of notice of termination or the event
giving rise to such termination. Any amounts payable pursuant to Sections 6 and
7 which are not made within the period specified in this Section 8 shall bear
interest at a rate equal to the lesser of (i) the maximum interest rate
allowable pursuant to applicable law or (ii) five points above the "prime rate"
of interest as published from time-to-time in the Eastern Edition of the Wall
Street Journal.
9. Benefits.
(a) General. Except if RIESENFELD resigns without Good Reason (other
than retirement on or after the age of 62), in the event RIESENFELD's employment
with the Corporation is terminated for any reason prior to the end of the Term,
RIESENFELD and his dependents, if any, will continue to participate in any group
health plan sponsored by the Corporation in which RIESENFELD was participating
on the date of such termination, at a cost to RIESENFELD and his dependents
equal to the amount charged by the Corporation to similarly situated employees
while employed by the Corporation, for the remainder of the Initial Term or, if
termination occurs within an Additional Term, for the remainder of such
Additional Term. Thereafter, RIESENFELD and his dependents, if any, shall be
entitled to elect to continue such health coverage, at a cost to RIESENFELD and
his dependents equal to the amount charged by the Corporation to similarly
situated employees while employed by the Corporation, for the longest period of
time permitted by the agents of the Corporation who arrange for such health
coverage, with such period to last at least twelve (12) months from the date of
termination. Upon termination for any reason, in addition to any payments to
which RIESENFELD may be entitled upon termination of his Employment pursuant to
any provision of this Agreement, RIESENFELD shall be entitled to any benefits
under any pension, supplemental pension, savings, or other employee benefit plan
(other than life insurance) in which RIESENFELD was participating on the date of
any such termination.
(b) Other Benefits. In addition to the rights provided in Section
9(a), in the event of a termination of RIESENFELD's employment for any reason,
RIESENFELD shall retain his rights under the "Managers Insurance Scheme"
pursuant to Section 4(c) and to the payment of reasonable moving expenses to
Israel pursuant to Section 4(d), and shall retain his use of the Company
automobile provided under Section 4(e) for the remainder of its lease term. Such
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benefits, together with the benefits provided in Section 9(a), shall be referred
to herein, collectively, as "Other Compensation".
10. Confidentiality.
(a) "Corporation Information" Defined. "Corporation Information"
means all information, knowledge or data of or pertaining to (i) the
Corporation, its employees and all work undertaken on behalf of the Corporation,
and (ii) any other person, firm, corporation or business organization with which
the Corporation may do business during the Term, that is not in the public
domain (and whether relating to methods, processes, techniques, discoveries,
pricing, marketing or any other matters).
(b) Confidentiality. RIESENFELD hereby recognizes that the value of
all trade secrets and other proprietary data and all other information of the
Corporation not in the public domain disclosed by the Corporation in the course
of his employment with the Corporation is attributable substantially to the fact
that such confidential information is maintained by the Corporation in strict
confidentiality and secrecy and would be unavailable to others without the
expenditure of substantial time, effort or money. RIESENFELD therefore, except
as provided in the next two sentences, covenants and agrees that all Corporation
Information shall be kept secret and confidential at all times during and after
the end of the Term and shall not be used or divulged by him outside the scope
of his employment as contemplated by this Agreement, except as the Corporation
may otherwise expressly authorize by action of the Board. In the event that
RIESENFELD is requested in a judicial, administrative or governmental proceeding
to disclose any of the Corporation Information, RIESENFELD will promptly so
notify the Corporation so that the Corporation may seek a protective order or
other appropriate remedy and/or waive compliance with this Agreement. If
disclosure of any of the Corporation Information is required, RIESENFELD may
furnish the material so required to be furnished, but RIESENFELD will furnish
only that portion of the Corporation Information that legally is required.
11. Successors and Assigns.
(a) RIESENFELD. This Agreement is a personal contract, and the
rights and interests that the Agreement accords to RIESENFELD may not be sold,
transferred, assigned, pledged, encumbered, or hypothecated by him. All rights
and benefits of RIESENFELD shall be for the sole personal benefit of RIESENFELD,
and no other person shall acquire any right, title or interest under this
Agreement by reason of any sale, assignment, transfer, claim or judgment or
bankruptcy proceedings against RIESENFELD. Except as so provided, this Agreement
shall inure to the benefit of and be binding upon RIESENFELD and his personal
representatives, distributees and legatees.
(b) The Corporation. This Agreement shall be binding upon the
Corporation and inure to the benefit of the Corporation and of its successors
and assigns.
12. Entire Agreement. This Agreement represents the entire agreement
between the parties concerning RIESENFELD's employment with the Corporation and
supersedes all prior
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negotiations, discussions, understandings and agreements, whether written or
oral, between RIESENFELD and the Corporation relating to the subject matter of
this Agreement, including, without limitation, the Employment Agreement, dated
as of October 1, 1992, between the Corporation and RIESENFELD. Notwithstanding
the foregoing, the Benefit Document shall not be superseded.
13. Amendment or Modification; Waiver. No provision of this Agreement
may be amended or waived unless such amendment or waiver is agreed to in writing
signed by RIESENFELD and by a duly authorized officer of the Corporation. No
waiver by any party to this Agreement of any breach by another party of any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of a similar or dissimilar condition or provision at
the same time, any prior time or any subsequent time.
14. Notices. Any notice to be given under this Agreement shall be in
writing and delivered personally or sent by overnight courier or registered or
certified mail, postage prepaid, return receipt requested, addressed to the
party concerned at the address indicated below, or to such other address of
which such party subsequently may give notice in writing:
If to RIESENFELD: Gad Riesenfeld
30 South Adelaide Street, Apt. PH-L
Highland Park, NJ 08904-1606
If to the Corporation: Pharmos Corporation
99 Wood Avenue South, Suite 301
Iselin, NJ 08630
Attention: President
with a copy to: Ehrenreich Eilenberg & Krause LLP
11 East 44th Street
New York, NY 10017
Attention: Adam D. Eilenberg, Esq.
Any notice delivered personally or by overnight courier shall be deemed
given on the date delivered and any notice sent by registered or certified mail,
postage prepaid, return receipt requested, shall be deemed given on the date
mailed.
15. Severability. If any provision of this Agreement or the application of
any such provision to any party or circumstances shall be determined by any
court of competent jurisdiction to be invalid and unenforceable to any extent,
the remainder of this Agreement or the application of such provision to such
person or circumstances other than those to which it is so determined to be
invalid and unenforceable shall not be affected, and each provision of this
Agreement shall be validated and shall be enforced to the fullest extent
permitted by law. If for any reason any provision of this Agreement containing
restrictions is held to cover an area or to be for a length of time that is
unreasonable or in any other way is construed to be too broad or to any extent
invalid, such provision shall not be determined to be entirely null, void and of
no effect; instead, it is the
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intention and desire of both the Corporation and RIESENFELD that, to the extent
that the provision is or would be valid or enforceable under applicable law, any
court of competent jurisdiction shall construe and interpret or reform this
Agreement to provide for a restriction having the maximum enforceable area, time
period and such other constraints or conditions (although not greater than those
contained currently contained in this Agreement) as shall be valid and
enforceable under the applicable law.
16. Survivorship. The respective rights and obligations of the parties
hereunder shall survive any termination of this Agreement to the extent
necessary to the intended preservation of such rights and obligations.
17. Headings. All descriptive headings of sections and paragraphs in this
Agreement are intended solely for convenience of reference, and no provision of
this Agreement is to be construed by reference to the heading of any section or
paragraph.
18. Withholding Taxes. All salary, benefits, reimbursements and any other
payments to RIESENFELD under this Agreement shall be subject to all applicable
payroll and withholding taxes and deductions required by any law, rule or
regulation of and federal, state or local authority.
19. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together constitute one and same instrument.
20. Applicable Law; Jurisdiction. The laws of the State of New York shall
govern the interpretation, validity and performance of the terms of this
Agreement, without reference to rules relating to conflicts of law. Any suit,
action or proceeding against RIESENFELD with respect to this Agreement, or any
judgment entered by any court in respect thereof, may be brought in any court of
competent jurisdiction in the State of New York, as the Corporation may elect in
its sole discretion, and RIESENFELD hereby submits to the exclusive jurisdiction
of such courts for the purpose of any such suit, action, proceeding or judgment.
[THE BALANCE OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
/s/ Gad Riesenfeld
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GAD RIESENFELD
PHARMOS CORPORATION
By: /s/ Haim Aviv
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Haim Aviv
Chairman and Chief Executive Officer
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